April Jobs Report: Tariff Uncertainty and Economic Cooling Ahead

TLDR:

Economists expect 135,000 nonfarm payrolls added in April, down from 228,000 in March Unemployment rate projected to hold steady at 4.2% Report is the first since Trump’s April 2 “Liberation Day” tariffs announcement Recent economic data shows signs of cooling, with GDP contraction in Q1 Markets pricing 60% chance of Fed rate cut in June

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The April jobs report, set for release Friday morning, is expected to show a slowdown in hiring amid growing economic uncertainty following President Trump’s tariff announcements. Economists anticipate the addition of 135,000 nonfarm payrolls, significantly lower than March’s 228,000 jobs, while the unemployment rate is projected to remain unchanged at 4.2%.

This report marks the first major employment data since Trump’s “Liberation Day” tariffs were announced on April 2. Investors are closely watching for signs that the new trade policies might be cooling the labor market.

Source: Yahoo Finance

The Bureau of Labor Statistics will release the data at 8:30 a.m. ET on Friday. Wall Street consensus estimates compiled by Bloomberg expect nonfarm payrolls to rise by 135,000 in April, with unemployment holding at 4.2%.

March saw the economy add 228,000 jobs. The unemployment rate for that month stood at 4.2%.

Recent Economic Indicators

Other economic indicators have already begun to show impacts from the tariff announcements. The Bureau of Economic Analysis recently reported that economic growth contracted for the first time in three years during the first quarter.

A surge in imports ahead of the tariff implementation weighed on growth. The manufacturing sector has also shown negative effects from the tariffs in recent activity reports.

Various consumer sentiment surveys have indicated downward pressure as a result of the trade policy changes. However, economists believe the April jobs report may not yet fully reflect these concerns.

“Similar to March, solid April data may feel stale as it reflects labor market conditions during the first two weeks of the month, likely too soon to reflect employment decisions made after the April 2 tariff announcement,” wrote Citi economist Veronica Clark in a preview note.

Some cooling signs have emerged in recent labor market data. Weekly claims for unemployment benefits reached their highest level in two months during the final full week of April.

The number of Americans filing for ongoing unemployment insurance reached the highest level since November 2021. This follows weaker-than-expected private payroll additions reported on Wednesday.

Job openings at the end of March hovered near their lowest level since December 2020, according to data released Tuesday. These indicators suggest potential softening in the labor market.

Market Implications

“Unease is the word of the day,” noted ADP chief economist Nela Richardson in the April private payroll release. “Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data. It can be difficult to make hiring decisions in such an environment.”

The jobs report will likely influence Federal Reserve policy decisions. Markets are currently pricing in a 60% probability that the Fed will resume interest rate cuts at its June meeting, according to the CME FedWatch Tool.

Average hourly earnings are expected to rise 0.3% month-over-month, matching March’s increase. Year-over-year, earnings are forecast to grow 3.9%, slightly above the 3.8% seen in March.

The average weekly hours worked is projected to remain steady at 34.2 hours. These wage and hour metrics provide additional insight into labor market strength beyond the headline job numbers.

The April report comes at a time when policymakers are carefully balancing concerns about economic growth with still-persistent inflation pressures. The labor market has been a key strength throughout recent economic uncertainty.

Friday’s data will help clarify whether that strength is beginning to wane as new trade policies take effect and businesses adjust their hiring plans accordingly.

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